Newgen Software Technologies delivered mixed financial results for the June quarter of FY27 (Q1FY27), with consolidated net profit falling 40.9% year-on-year to ₹62.82 crore compared to ₹85.72 crore in Q1FY26, according to latest reports from Business Standard. However, the company had previously reported consolidated net profit rising 26.35% year-on-year to ₹62.82 crore compared to ₹49.72 crore in Q1FY26, as reported by Business Standard. The topline performance showed revenue declining 21.2% quarter-on-quarter to ₹356.68 crore from ₹452.67 crore in the previous quarter, though it had grown 11.2% annually from ₹314.72 crore in Q1FY26. Profit before tax also declined 43.8% sequentially to ₹82.12 crore from ₹146.12 crore in Q4FY26.
At the operational level, Newgen Software experienced significant deterioration in profitability metrics despite strong year-on-year growth. As reported by Business Standard, EBIT dropped 64% sequentially to ₹55 crore from ₹152 crore in Q4FY26, while EBIT margin compressed sharply to 15.4% against 33.6% in the previous quarter. The operating profit margin (OPM) improved to 15.68% in Q1FY27 from 14.03% in Q1FY26, indicating better operational efficiency on an annual basis, though the sequential decline was more pronounced than previously reported. The company's diluted normalized EPS fell 54.70% sequentially to ₹3.45 from ₹7.96 in Q4FY26.
Despite overall revenue decline, Newgen Software demonstrated robust growth in its recurring revenue segments during Q1FY27. According to Business Standard, annuity revenue streams (ATS/AMC, support, and cloud/SaaS and Subscription license) were ₹254 crore, up 14% year-on-year. The subscription revenues added up to ₹146 crore, witnessing a growth of 21% year-on-year, indicating strong customer retention and recurring revenue model strength. This growth in recurring revenue streams provides stability and predictability for future quarters.
The company's revenue performance varied significantly across different geographical segments during Q1FY27, with broad-based growth led by the Americas region. As reported by Business Standard, the Americas region revenue grew 27% year-on-year, while APAC revenue grew by 12% YoY and EMEA revenues increased by 10% YoY. The India vertical revenue stood at ₹96 crore, reflecting a 1% year-on-year rise but a 23% quarter-on-quarter fall from ₹95 crore and ₹124 crore respectively. The US segment revenue increased 28% annually to ₹92 crore, though it slipped 13% sequentially from ₹106 crore in Q4FY26. Growth was led by healthcare + insurance and government verticals, with the company's deal pipeline continuing to be healthy with an increase in deal size.
Despite the softer quarterly performance, Newgen Software management remains optimistic about future growth prospects and has secured significant new business during the quarter. Speaking to Business Standard, Managing Director and CEO Virender Jeet said the company expects to return to its historical growth trajectory after FY26 revenue growth slowed to 6%. Jeet highlighted that during the quarter, the company added 10 new customer logos, secured strategic wins across banking, insurance, and enterprise content management. The company is also focusing on artificial intelligence-led products and operational efficiencies to support both margins and deal wins, with nearly half of its future use cases expected to have AI as a significant component. Some of the deferred deals from Q1FY27 are expected to ramp up in Q2, with the pipeline for APAC, especially the government segment, looking healthy.
The disappointing sequential results immediately impacted investor sentiment, with Newgen Software shares experiencing significant selling pressure. According to Business Standard, shares slipped 3.30% to ₹540.65 following the earnings announcement. From the beginning of the year, Newgen Software shares have tumbled 35%, with the stock having surged 14% over a month but dipping nearly 28% in the past six months. The company's management indicated that profitability could improve meaningfully if revenue growth returns to the high-teen range over the next two years. ICICI Securities has recommended a HOLD rating with a target price of ₹560, citing resilient revenue growth of 11.2% YoY and improved EBIT margins driven by operational efficiencies.
